The Tibetan capital of Lhasa was on the brink of chaos today as the fiercest anti-government protests in almost 20 years erupted into violence between Chinese security forces and protesters wielding iron bars.

A radio station reported at least two people had been killed in the rioting. The US-funded Radio Free Asia quoted two witnesses as saying two bodies were seen lying on the ground in the Barkor area, a shopping district where protests had been particularly fierce.

Officials at Lhasa's emergency medical centre told the AFP news agency that several people had been killed and many others were injured.

Armed police used water cannons and teargas on the crowds, and witnesses say security vehicles were set on fire and Chinese drivers were carried off with bloodied faces after being beaten by a mob of young Tibetans.

The US embassy in Beijing said its citizens in Lhasa had reported gunshots being fired in the city. The embassy emailed an advisory note to Americans warning them to stay away from the city, now in its fifth day of anti-Chinese protests.

The Dalai Lama, the exiled spiritual leader of Tibet's Buddhists, urged China not to use violence to quell the protests, which he called "a manifestation of the deep-rooted resentment of the Tibetan people under the present governance".

"I therefore appeal to the Chinese leadership to stop using force and address the long-simmering resentment of the Tibetan people through dialogue with the Tibetan people," he said in a statement.

China offered a swift riposte, the official Xinhua news agency issuing a statement blaming the violence on the "Dalai clique", Beijing's usual term for the Dalai Lama's supporters

The EU and the White House also issued statements urging China to show restraint.

Coming just months before the start of the 2008 Olympics, the protests against Beijing rule threaten to overshadow preparations for the games.

A resident told the Guardian that he heard an explosion and around 10 shots every minute at one point, but thought it was teargas rather than bullets being fired because he saw people running from plumes of smoke and covering their mouths.

"I am too afraid to go out," the source, who asked to remain anonymous, said. "It is chaos out there."

The source, who is from the Chinese Han ethnic group, said he saw Tibetans attack two fire engines.

"I saw Tibetans throwing stones at the vehicles. They dragged drivers from vehicles, took off their uniforms and helmets, then beat them.

"The chanting mob beat up around five or six drivers who had to be carried away with blood on their faces ... then they put a motorbike under the fire engine and set fire to it so the engine was burned."

The report was difficult to confirm. The Chinese government has yet to make a statement, and communications with the tightly-controlled Himalayan region are difficult even during calm periods.

A blogger who writes from Lhasa under the name Beifang described the violence on his blog.

"Police cars and fire engines were outside smashed and burned. A lot of Tibetans ran towards Dazhao [Jokhang] temple. I heard gunshots. Five army police vehicles drove that way. A large number of armed police followed. A few people with blood on their faces were taken away."

Tibetan support groups overseas said they were hearing reports of a fire and protests near the Tromsikhang market near the Jokhang temple in central Lhasa.

According to the Free Tibet campaign, there were also protests today in the Labrang monastery in Gansu province, where 200 monks led demonstrations on the streets. The group said this showed the protests were gathering momentum.

The AFP news agency said one of its reporters saw monks leading a crowd of around 300 people near the monastery, one of the most important in Tibetan Buddhism.

The AFP news agency said one of its reporters saw monks leading a crowd of around 300 people near the monastery, one of the most important in Tibetan Buddhism.

Unrest also spread to other countries, with police in New Delhi clashing with pro-Tibet protesters who tried to reach the Chinese embassy. In Kathmandu, the Nepalese capital, police scuffled with around 1,000 protesters, including dozens of Buddhist monks.

Since the first protest by monks on Monday, thousands of armed police have locked down monasteries in and around Lhasa. Witnesses said today's protesters were mostly lay Tibetans.

China's Xinhua news agency reported that shops had been set on fire in Lhasa but gave no other details.

The International Campaign for Tibet said two monks at the Sera monastery had stabbed themselves and others had gone on hunger strike.

About a dozen monks were reportedly detained on Monday, when several hundred from the Sera and Drepung monasteries took to the streets to mark the 49th anniversary of a failed uprising against Beijing. Similar protests took place in the Ganden and Lutsang monasteries in Qinghai (known in Tibetan as Amdo) where hundreds of monks reportedly chanted slogans calling for their exiled leader, the Dalai Lama, to return.

The upsurge in activism comes amid growing frustration with the lack of progress in talks between representatives of the Dalai Lama and Beijing.